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Local, foreign investment of phone manufacturers at risk

Tax and VAT exemption needed to boost local industry, minister urges NBR
Staff Correspondent
29 Mar 2023 21:38:58 | Update: 29 Mar 2023 21:59:00
Local, foreign investment of phone manufacturers at risk
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Various complexities, including higher taxation, have bogged down mobile phone production and assembling companies and put their foreign and local investment at risk.

Manufacturers are not getting exemption facilities because the National Board of Revenue (NBR) does not include essential raw materials in the respective SROs, due to which high tariffs have put the companies under threat.

Posts and Telecommunications Minister Mustafa Jabbar recently sent a letter to NBR in this regard and presented proposals for the budget for FY2023-24.

NBR has to subtract from SROs some materials that are now being produced locally like phone chargers, USB cables, etc, aiming to enhance and encourage local production. Now, it’s become a must to protect the investment of genuine investors and control unscrupulous traders, read the letter.

Jabbar called for providing an exemption facility in FY24 for the development of local manufacturing companies and investment protection. To reduce the tax burden and avoid complexities, he proposed to withdraw VAT at the local production stage.

He also proposed to increase VAT to 7.5-10 per cent from the existing 3-5 per cent for the assembling companies to develop the domestic production industry, save foreign exchange reserves, increase revenue, generate employment and strengthen the economic conditions.

The minister further said that due to a lack of a specific name, some parts for cellular phone manufacturing, such as Loaded Printed Circuit Board, Mother Board, etc., are being taxed at lower taxation through the HS code. “Therefore, the investment for the local manufacturing companies is at risk.”

Jabbar also urged NBR to resolve some complications, which have risen in imports due to inconsistency in HS Code descriptions with some parts including touch panels, LCM and Touch with Display used for manufacturing phones.